Dealing with Debt Collectors: What to Remember

If you have had some financial problems, such as loss of a job, that have affected your debt repayment schedule, you may have to work with a commercial debt collection service. Commercial debt collectors are individuals who collect debts from consumers on behalf of businesses. This usually happens when as a debtor you have failed to pay your creditor as agreed in your contract. If you are contacted by a debt collector, it is essential that you know a few things to avoid lengthy and costly legal proceedings. Here are some tips to remember.

Negotiations for Repayment

If you have acknowledged owing the debt but are obviously not in a position to repay according to the time frames agreed in your contract, you can always negotiate a new repayment plan. Your debt collector may agree to terms such as decreasing your repayment amounts or increasing your repayment period. However, you will be required to give information concerning your current financial situation for assessment of your inability to repay the debt as agreed under your initial contract.

However, remember that your debt collector or creditor can reject your proposal for a new repayment plan. Should this happen, you can provide them with information on what you can afford and how you plan to make the repayment. You should do this in writing. If your request is still rejected, consider dispute resolution schemes. These schemes are usually established to hear complaints and resolve disputes arising from such cases. What's more, most of these schemes offer their services for free, but you will need the debt collector or creditor to tell you the scheme to which the business belongs.

Statute-Barred Debts

Under the law, creditors are usually allowed a maximum period within which they should take action if you fail to repay. This period is usually referred to as the limitation period and if your debt is passed this limit, it is deemed old or statute-barred. This means if you wish to pay, you can do so, but you may not have to. However, remember that your debt collector or creditor can still pursue some action to try to recover the money from you. Besides, it is important to understand that while you are at liberty to pay or not to, the debt may not be removed from your credit reference file, so it is best to make an effort to repay it if you wish to be approved for credit services later on.

The time the limitation period starts running is also important. Usually it will start counting when the creditor is legally allowed to start a cause of action to recover the debt. This will be clearly outlined in your agreement and may start after one or more missed payments. Remember that the limitation period will vary depending on the kind of debt you have. Some debts have a greater limitation period than others.